175.37 - AGRICULTURAL ASSETS TRANSFER TAX CREDIT -- AGREEMENT.
175.37 AGRICULTURAL ASSETS TRANSFER TAX CREDIT --
AGREEMENT.
1. An agricultural assets transfer tax credit is allowed under
this section. The tax credit is allowed against the taxes imposed in
chapter 422, division II, as provided in section 422.11M, and in
chapter 422, division III, as provided in section 422.33, to
facilitate the transfer of agricultural assets from a taxpayer to a
beginning farmer.
2. In order to qualify for the tax credit, the taxpayer must meet
qualifications established by rules adopted by the authority. At a
minimum, the taxpayer must comply with all of the following:
a. Be a person who may acquire or otherwise obtain or lease
agricultural land in this state pursuant to chapter 9H or 9I.
However, the taxpayer must not be a person who may acquire or
otherwise obtain or lease agricultural land exclusively because of an
exception provided in one of those chapters or in a provision of
another chapter of this Code including but not limited to chapter 10,
10C, 10D, or 501, or section 15E.207.
b. Execute an agricultural assets transfer agreement with a
beginning farmer as provided in this section.
3. An individual may claim a tax credit under this section of a
partnership, limited liability company, S corporation, estate, or
trust electing to have income taxed directly to the individual. The
amount claimed by the individual shall be based upon the pro rata
share of the individual's earnings from the partnership, limited
liability company, S corporation, estate, or trust.
4. The tax credit is allowed only for agricultural assets that
are subject to an agricultural assets transfer agreement. The
agreement shall provide for the lease of agricultural land including
any improvements and may provide for the rental of agricultural
equipment as defined in section 322F.1.
a. The agreement may be made on a cash basis or on a
commodity share basis which includes a share of the crops or
livestock produced on the agricultural land. The agreement must be
in writing.
b. The agreement shall be for at least two years, but not
more than five years. The agreement or that part of the agreement
providing for the lease may be renewed by the beginning farmer for a
term of at least two years, but not more than five years. An
agreement does not include a lease or the rental of equipment
intended as a security.
5. The tax credit shall be calculated based on the gross amount
paid to the taxpayer under the agricultural assets transfer
agreement.
a. Except as provided in paragraph "b", the tax credit
shall equal five percent of the amount paid to the taxpayer under the
agreement.
b. The tax credit shall equal fifteen percent of the amount
paid to the taxpayer from crops or animals sold under an agreement in
which the payment is exclusively made from the sale of crops or
animals.
6. In order to qualify as a beginning farmer, a person must be
eligible to receive financial assistance under section 175.12.
7. A tax credit in excess of the taxpayer's liability for the tax
year may be credited to the tax liability for the following five
years or until depleted, whichever is earlier. A tax credit shall
not be carried back to a tax year prior to the tax year in which the
taxpayer redeems the tax credit. A tax credit shall not be
transferable to any other person other than the taxpayer's estate or
trust upon the taxpayer's death.
8. A taxpayer shall not claim a tax credit under this section
unless a tax credit certificate issued by the authority is attached
to the taxpayer's tax return for the tax year for which the tax
credit is claimed. The authority must review and approve an
application for a tax credit as provided by rules adopted by the
authority. The application must include a copy of the agricultural
assets transfer agreement. The authority may approve an application
and issue a tax credit certificate to a taxpayer who has previously
been allowed a tax credit under this section. The authority may
require that the parties to an agricultural assets transfer agreement
provide additional information as determined relevant by the
authority. The authority shall review an application for a tax
credit which includes the renewal of an agricultural assets transfer
agreement to determine that the parties to the renewed agreement meet
the same qualifications as required for an original application.
However, the authority shall not approve an application or issue a
certificate to a taxpayer if any of the following applies:
a. The taxpayer is at fault for terminating a prior
agricultural assets transfer agreement as determined by the
authority.
b. The taxpayer is any of the following:
(1) A party to a pending administrative or judicial action,
including a contested case proceeding under chapter 17A, relating to
an alleged violation involving an animal feeding operation as
regulated by the department of natural resources, regardless of
whether the pending action is brought by the department or the
attorney general.
(2) Classified as a habitual violator for a violation of state
law involving an animal feeding operation as regulated by the
department of natural resources.
c. The beginning farmer is responsible for managing or
maintaining agricultural land and other agricultural assets that are
greater than necessary to adequately support a beginning farmer as
determined by the authority according to rules which shall be adopted
by the authority.
d. The agricultural assets are being leased or rented at a
rate which is substantially higher or lower than the market rate for
similar agricultural assets leased or rented within the same
community, as determined by the authority.
9. A taxpayer or the beginning farmer may terminate an
agricultural assets transfer agreement as provided in the agreement
or by law. The taxpayer must immediately notify the authority of the
termination.
a. If the authority determines that the taxpayer is not at
fault for the termination, the authority shall not issue a tax credit
certificate to the taxpayer for a subsequent tax year based on the
approved application. Any prior tax credit is allowed as provided in
this section. The taxpayer may apply for and be issued another tax
credit certificate for the same agricultural assets as provided in
this section for any remaining tax years for which a certificate was
not issued.
b. If the authority determines that the taxpayer is at fault
for the termination, any prior tax credit allowed under this section
is disallowed. The tax credit shall be recaptured and the amount of
the tax credit shall be immediately due and payable to the department
of revenue. If a taxpayer does not immediately notify the authority
of the termination, the taxpayer shall be conclusively deemed at
fault for the termination.
10. The amount of tax credit certificates that may be issued
pursuant to this section shall not exceed six million dollars in any
fiscal year. The authority shall issue the tax credit certificates
on a first-come, first-served basis. Section History: Recent Form
2006 Acts, ch 1161, §2, 7; 2007 Acts, ch 22, §45; 2009 Acts, ch
135, §2, 3
Referred to in § 422.11M, 422.33 Footnotes
Section takes effect January 1, 2007, and applies to tax years
beginning on or after that date; 2006 Acts, ch 1161, §7
Subsection 10 applies to agricultural assets transfer agreements
executed on or after July 1, 2009; 2009 Acts, ch 135, §3